By Neeraj Manchanda, Founder, ZUGE Electric
The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme was launched in 2015 to promote the adoption of electric vehicles (EVs) in India. The scheme provided subsidies to manufacturers and buyers of EVs, and also offered incentives for the development of charging infrastructure.
The FAME scheme was a success, and helped to increase the number of EVs on the roads in India. However, the government has announced that the scheme would be withdrawn in March 2024.
The government has cited two reasons for the withdrawal of the scheme. First, the government believes that the scheme has achieved its objectives. The number of EVs on the road in India has increased significantly since the launch of the scheme, and the government believes that the EV industry is now mature enough to survive without government support.
Second, the government has cited the high cost of the FAME scheme as a reason for its withdrawal. The scheme has cost the government billions of rupees, and the government believes that this money could be better spent on other priorities.
According to the Union Budget document, the subsidy under the FAME scheme for fiscal 2024 has been projected at Rs 5,172 crore. This is in comparison to the revised estimate of Rs 2,897 crore during the current fiscal year.
The withdrawal of the FAME scheme is a setback for the Indian EV industry. The scheme provided the much-needed support to the industry, and its withdrawal will only make it more difficult for EV manufacturers to compete with the traditional ICE automakers.
The timing of the withdrawal is also unfortunate. The EV industry is still in its early stages in India, and the withdrawal of the FAME scheme could dampen the demand for EVs.
It is unclear what the impact of the withdrawal of the FAME scheme would be on the Indian EV industry. However, it is clear that the withdrawal is a setback for the industry, and it will make it more difficult for EVs to compete with traditional vehicles.
The Case for EVs
Despite the withdrawal of the FAME scheme, there are still many reasons to buy an EV in India. An extremely low fuel cost and low maintenance makes it peerless.
In addition to this, the government is still offering some incentives for the purchase of EVs. For example, the government offers a tax rebate of up to Rs 1.5 lakhs on the purchase of an EV.
If you are considering buying an EV, there are a few things you should keep in mind. First, the upfront cost of an EV is higher than the cost of a traditional ICE vehicle. However, the long-term savings or the running cost of an EV outweighs the ICE vehicle by miles.
An illustration:
The Future of EVs in India
All the key parameters suggest that the future of EVs in India looks bright. EVs are becoming more affordable, more efficient, and more convenient. Withdrawal of FAME subsidy could pose some hiccups but the EV industry has reached the critical size that it will survive it and will survive it in style. The customers are ready, the government is ready, the manufacturers are ready, the investors are ready. The industry is evolving rapidly and will soon hit a sweet spot that will make the growth exponential. Electric Vehicles are here to stay and grow. Simply unstoppable.
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